International Trade And Foreign Direct Investment:The Role And Impact Of Institutional Quality,and Policy Uncertainty

International trade and foreign direct investment(FDI)are considered the most important drivers of economic growth and integration in the world economy.Under the previous,academics have concentrated their efforts on reducing the issues undermining global trade and FDI.However,among these determinants,the institutions and policy uncertainty are considered the most significant factors.Scholars have attempted to reduce deterrent factors of exports and FDI to support strong and efficient institutions.This thesis’s main focus is to examine between exports and institutional quality,FDI,and policy uncertainty.First,I investigates the nexus between institutional quality and exports in 40 Asian economies.Second,I analyse the role of Institutions,China trade with belt and road countries.Third,I explores the association between policy uncertainty and FDI,the role and impact of institutional quality.The findings provide policymakers with insights into various aspects of the potential risks posed by different government strategies.This dissertation is divided into seven well-differentiated chapters.In the first chapter,I have given a general introduction to the thesis.The next two chapters present a comprehensive overview of institutional quality,uncertainty,exports and FDI,including theoretical and empirical background and related literature.Chapter 4 explores the nexus between institutional quality and exports.Most Asian countries suffer from a deficit of "good" institutions,and the Asian region was neglected in the literature on institutions and trade.This literature offers a broad consensus that poor institutions hamper exports.Thus,our study examines the influence of institutional quality on exports in 40 Asian economies.We incorporate the six global institutional-quality indices.(i.e.,government effectiveness,voice and accountability,the rule of law,political stability,regulatory quality,and control of corruption)as potential determinants for exports and their components in a sample of 40 economies covering the period 1996-2019.System GMM technique is preferred for estimations.Our results show that institutional quality seems to be an important determinant of exports and their components.The six institutional quality indicators positively influence the total exports and exports of services.However,The exports of goods are passively influenced by voice and accountability,political stability,and control of corruption.At the same time,manufactured goods exports are simply linked with those institutional indicators except government effectiveness.Regarding,primary commodities export voice and accountability and political stability positively affected primary commodities exports.Our findings suggest that Asian countries should better political institutions and improve the business environment to enhance exports.Chapter 5 explores the impact of institutional quality on China’s trade with Belt and Road economies by testing the augmented gravity model framework.Our empirical analysis is based on 16 years of balanced penal data of 65 Belt and Road economies.To address the potential endogeneity issue,we use the instrumental variable estimator developed for penal data models.We distinguish the crucial role of institutions in trading partner countries in shaping this result.Our outcomes outline an exciting story about the association between institutional quality and China’s export to and import from Belt and Road countries.We find that the weaker Voice and Accountability and Political Stability in B&R countries negatively affect China’s export to partner economies.In contrast,China imports from B&R economies show a statistically positive effect on institutions.Our findings are robust to employs a panel pseudo-maximum likelihood(PPML)estimation method.As part of broader trade integration,we conclude that the trading partners of China,the B&R countries,should invest in strengthening their institutions;this involves an institutional framework to enhance institutional quality and allow greater political openness.Chapter 6 examines policy uncertainty and institutional quality effects on foreign direct investment(FDI)inflows using a comprehensive sample of 115 countries over 1996-2017.By employ the sequential(two-stage)technique of linear panel data models.Our main results reveal that countries with a higher level of economic policy uncertainty receive lower FDI inflows.Moreover,although countries with strong institutions attract more FDI inflows,our result also suggests that domestic policy uncertainty adversely affects FDI inflows even in the existence of developed institutions.We examine data by several methodological approaches to further support our results,demonstrating that increased uncertainty discourages cross-border investment,reflecting the so-called safe haven effect,in which foreign investors shun risky investments.Our findings contribute to a better understanding of the relationship between uncertainty,FDI,and the host country’s level of institutional quality.The final chapter concludes the study and identifies a possible extension of the study.This thesis presents many empirical results that add to the extant studies on institutional quality and ucertainity on exports and FDI.